The statement is misleading. People are making 18% interest on the value of Bitcoin et al. at the value of 2022, which is less than $20k. Now that is $60k, back to the value levels of 2021. Thus, the only reason there is interest is that the cryptocurrencies found gained back their value, and the bankruptcy court gets to consider the values when the bankruptcy started in 2022, not current/before 2022 values.
You are correct. As phrased, this headline and large parts of the article are fake news. The first sentence about "profiting from the money they put into the exchange" is particularly egregious. Nobody was putting money into the exchange when withdrawals were frozen, which is when these marks are from.
The reference amount that's being "repaid" is a low quote from near the bottom of the crash. Nobody signed up for this correlation between (1) crypto price crash and (2) the exchange halting withdrawals. It was a straight-up theft of optionality.
That said, the repayments do exceed expectations. That is newsworthy. I just wish they could report that news factually.
I'm seeing a pattern of misleading headlines wrt this. My guess is that it is PR at work to convince public that FTX was a victimless crime - this is to help SBF avoid his full sentence.
There's definitely a pattern, but I don't want to assume motive. I doubt SBF will get his retrial, but still, it's good PR for a lot of people -- for Effective Altruism, for Stanford, for Sequoia -- whose reputations took a hit here. It's even good PR for the bankruptcy team to say that they got full restitution. And for the journalists, of course, it's a headline that really pops.
But sitting here, we can't really know why we're being lied to. All we can do is take note of the lies, and of who's repeating them.
Or, it's just kinda and interesting story on it's own, no crazy conspiracy theories needed?
When Bernie Madoff or Enron or any of the other major headline-grabbing frauds fell apart, the victims generally got back almost nothing. The fact that FTX is returning all of the user's money, plus interest, is quite unique and newsworthy.
Madoff is kinda like an FTX: on average, everyone has received 72% of their “investment” back. But there was some rule about everyone getting their first $1m or something back 100%.
Where madoff is a bit different is that they were more aggressive in taking money back that people took out. You’re really only getting back what you put in (and obvious losses through time value of money).
And madoff didn’t gamble with the money, he mostly just sat on it.
"That said, the repayments do exceed expectations. That is newsworthy. I just wish they could report that news factually."
So to flip it back on you: repaying the lowball marks, but not the actual full stolen value, is an interesting story on its own. No lies and exaggerations from the media are needed.
Also, where you write:
> "The fact that FTX is returning all of the user's money..."
No. This is not a "fact". This is a lie. You have been misinformed. That's my whole point. Do not call it a fact.
I think it has to do with the incredible and increasing amounts of competition for people's attention. And of course human nature in what titles people click on.
During sentencing, SBF attempted to argue that creditors had experienced "zero harm" as even then it was apparent FTX would be able to pay them back. John Ray himself rebutted that argument: https://www.courtlistener.com/docket/66631292/415/united-sta....
> And even taking into account the potential for achieving anticipated
recovery levels, which is by no means assured, customers still will never be in the same position they would have been had they not crossed paths with Mr. Bankman-Fried and his so-called brand of “altruism.”
The opportunity cost is real and cannot be ignored.
They have made more money than they invested. It is by definition a return on investment, not the return or timescale they envisaged but a return nonetheless i.e >100%.
Effectively they invested $100, that investment dropped to $0 (while funds were locked away during bankruptcy), and now they're worth $119.
The headline is only notable as usually creditors do not get 100% of their initial capital back during a bankruptcy, nevermind over 100%.
In an attempt to stop talking in circles, it seems we primarily disagree on the definition of "to make money" and whether it should consider opportunity cost + time value of money. The CNBC headline doesn't say return, it uses the aforementioned idiom.
IMO it absolutely should in this case, especially since the creditors demonstrated their desire to invest in the opportunity being considered, but I don't really care enough to argue about it over the Internet.
I don't know how bankruptcy documents work, but this is not a filling, it's a general-audience article.
The truth is if you had one Bitcoin in FTX, that was worth 20k. You might have bought for more or less than that. Now it's worth 60k. You didn't get the 20k back immediately (in which case you could have repurchased the Bitcoin immediately and not lose anything).
- If you bought Bitcoin above 20k, you lost money, whereas you wouldn't have otherwise.
- If you would have kept your Bitcoin, you would have 60k now. You didn't get a choice in the matter.
The problem if of course "what is money" — the thing you owned was a Bitcoin, and now you're getting back its value from back then in dollar terms. This value changed meanwhile, shocking! But quite clearly, most people would have had more money now if that hadn't happened.
So while it's possible that some people would have sold lower than 24k (it didn't stay that low very long), most people wouldn't have, and so they lost money, in the commonly accepted undertanding.
Imagine the government seized your house 10 years ago, then paid you back today its price from 10 years ago +20%. Did you not lose money?
Imagine you put up your house as an investment into some crypto exchange and the exchange goes bankrupt because it turns out they're misusing customer funds and defrauding their customers. You'll get your house back when legal proceedings are done. What value that house has before or after is sort of irrelevant except as a way for you to twist the issue to fit your narrative. Nobody made you put up your house in some nonsense crypto exchange. That was you.
Be glad the government is involved at all or you might not be getting anything back.
But what if instead of getting your house back, you're only getting the cash equivalent of what your house was worth THEN, plus some interest. Meanwhile, your house, which you no longer own, has tripled in value.
This is unironically the reason why stock trading is so heavily regulated.
If you looked at Bitcoin, whose entire pitch is that it's a poorly regulated speculative instrument, and thought "I'm going to put my house in this" you are an adult accepting unreasonable levels of risk.
Just because FTX (predictably) was run by a con man who got his whole company shut down DOESN'T MEAN that you're a victim. You gambled money you didn't have on a system you didn't care to understand and you are lucky to even get the money back.
>Be glad the government is involved at all or you might not be getting anything back.
This. I'm constantly surprised that the government helps people in these situations. If they want the government to be involved, they should push for crypto to actually follow all of the laws that apply to traditional financial things, which would eliminate a lot of these scams that end up requiring government intervention in the first place.
>That's the job of a government, and why would people fund it through taxes if it doesn't do its job?
Regulation and protection go hand in hand, if you don't want the regulation, you shouldn't be able to ask for the protection that goes along with it. If you want to gamble your real money by converting it to fake digital tokens, that's fine, but you shouldn't ask the government to use taxpayer money bail you out afterwards. If you want government protection for investments, you should invest in schemes that are regulated by the government instead.
Does it not also have to do with the increased value of some of the other assets FTX bought? I believe SBF invested a large amount in some AI companies.
FTX invested $500M in Anthropic for 8% (at the time) and the bankruptcy estate sold 2/3rds of that for $884M, while it is tidy sum, it doesn't move the needle much in the overall money owed to creditors of $11.2B .
The estate has recovered around $16B of the money, or basically close to half of the assets at the time, the bulk of the money is coming from bitcoin tripling in value, to put it another way if Bitcoin was same prices as 2022, then they would have only recovered ~ $5B or FTX continued operating without being frozen by the courts, they would need come with $33B to make their depositors whole in Bitcoin.
They barely held any bitcoin or ether in their assets 0.1% and 1.2% respectively that customers had bought or deposited on the platform, they did hold a lot of crypto assets though.
There was controversy from creditors over the steep discount, a discount itself is not unusual given the size of the block sale and the fact the tokens are locked for 4 years with monthly vesting. Naturally there was dispute on how much discount is acceptable .
while Solona has grown 10x in price since the bankruptcy, it is not like people who had deposited SOL tokens are now covering for other deposits with just their holdings.
What depositors assets had against their accounts at the time had little correlation to what FTX itself had as assets, the two most popular tokens Bitcoin (0.1%) ETH(1.2%) assets were lot less than what they would have been just storing the customer tokens as is.
It is simpler to talk in bitcoin price given its popularity and use as baseline rather than prices of tokens and assets actually held by FTX itself or by users on FTX.
The article mentions a stake in Anthropic that was sold for $900m, while it owes creditors $11.2b, so nah it wasn't enough to make a dent unless there were MANY other smaller investments that collectively added up to $3b on top of that.
I believe Anthropic was the most acclaimed/highest current value, and they still have about 1/3 of the original 8% investment.
a) I am curious at what discount they sell Anthropic shares right now;
b) I am not sure what is the prognosis for the other shares FTX owns;
[
c) which creditors have preference to which money pot; usually there is a pyramid. Here it talks about consumers. (Specifically those owed less than $50k.)
And there is a separate matter for shareholders who are looking at getting some of the seized by DoJ proceeds. (https://www.reuters.com/legal/crypto-exchange-ftxs-liquidati....)
]
Best way in general is to read the actual pleadings: news is not the best at giving a good idea what the court is actually ordering.
As big of a piece of shit SBF is, he was technically not lying about FTX having the money. It's just that those tweets by CZ triggered a run on the assets at the worst time, which combined with mismanagement/fraud on SFB's part, did not help.
a far cry from zero, and the CZ tweets triggered a run. How many other exchanges have enough assets on hand to cover every depositor at once instantaneously? Even mainstream banks cannot cover everyone (this is what a bank run is and is why central banks exist to provide a backstop in such an event).
Straw man. You said SBF "was technically not lying about FTX having the money." He was. If you ask me to hang on to your $12 and I spend half of it, I don't have the money.
> How many other exchanges have enough assets on hand to cover every depositor at once instantaneously?
All of them. Exchanges and clearinghouses in a proper financial system are fully collateralised.
> this is what a bank run is and is why central banks exist
Banks are leveraged. FTX was not supposed to be levered. It should have been able to survive a "run," because it wasn't supposed to have asset-liability mismatches.
> there are 200+ exchanges. you're saying all of them are fully collateralized?
In crypto? No. Because it's a marketing term there for brokers. FTX was, at the end of the day, a broker. (As is Coinbase and the other "exchanges" for how most people use them.)
In finance? Yes. Most exchanges (all in the U.S.) don't handle settlement; that's done by a clearinghouse, where the counterparty risk lives. They're fully collateralised [1].
